Defence (Options for Change)

In the defence debate last month, I set out the basis on which we have been considering options for change in defence. I would now like to advise the House of the broad proposals that we are considering and on which we will now be consulting with the NATO authorities and our allies, with the defence industries, and, most importantly, with all those directly affected in the armed forces and the MOD's civilian staff. My statement today follows the publication this morning of a valuable report from the Select Committee on Defence on the defence implications of recent events in eastern Europe and the Soviet Union.

The declaration issued at the NATO summit meeting here in London earlier this month said:
Europe has entered a new, promising era … This alliance must and will adapt".

The "Options for Change" have identified the ways in which our forces might be restructured by the mid-1990s in the light of these developments. The pace of change will depend upon the signature and implementation of a Conventional Forces in Europe agreement, on the progress of the two-plus-four talks, and on how quickly Soviet troops leave eastern Europe and other Soviet forces are run down. The precise shape of our contributions to NATO must reflect discussions yet to come with the NATO authorities and with our allies.

In the options for change studies, we have sought to devise a structure for our regular forces appropriate to the new security situation and meeting our essential peacetime operational needs. The framework that we have provided would be reinforced in a period of tension by drawing on volunteer reserves and reservists, who will have an important role to play. We have also allowed for the possible need to build back up our forces over a longer period should international circumstances ever require us to do so.

There clearly are opportunities but also risks in Europe; and elsewhere some worrying trends—not least, the proliferation of sophisticated weapons systems. We shall therfore continue to need a robust defence capability as our insurance against the unexpected. Our armed forces, albeit at lower levels, will be as important a safeguard for our country in the future as they have been in the past.

Our proposals will bring savings and a reduction in the share of GDP taken by defence. We need force levels which we can afford and which can realistically be manned, given demographic pressures in the 1990s. The aim is smaller forces, better equipped, properly trained and housed, and well motivated. They will need to be flexible and mobile and able to contribute both in NATO and, if necessary, elsewhere.

What I now have to put before the House are some proposals for change and some elements that will not change.

We shall retain our strategic deterrent with a four-boat Trident force. In accordance with NATO policy for an appropriate mix of nuclear and conventional forces, based in Europe, we shall also need a sub-strategic force of dual-capable Tornados with a stand-off missile.

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We must also continue to ensure the effective defence of the United Kingdom itself. A comprehensive air defence capability will still be essential, although with a smaller fighter force than had been planned. The United Kingdom fighter force would be held at seven squadrons of air-defence Tornados, supplemented by armed Hawks, and the remaining two Phantom squadrons would be withdrawn. We plan to retain at about present levels our home defence forces and our capability to deal with hostile mine-laying in home waters. We shall sustain our contribution in support of the police in Northern Ireland. For as long as they are needed, we will provide forces for our dependent territories and other overseas responsibilities in the Falklands, Cyprus, Gibraltar, Belize and—until 1997—Hong Kong.

We will continue to play our full part in the defence of Europe. We will continue to deploy forces in Germany alongside our German and other allies, a contribution which is, I know, warmly welcomed by the German Government. We envisage that, in the changed circumstances of the mid-1990s, our stationed forces could be roughly half their present strength. When reinforced from the United Kingdom, our Army contribution could comprise about two divisions, rather than four as at present. Our contribution will need to be shaped with that of our allies to fit the new force structures which we expect to see in the central region.

We expect to reduce the RAF presence in Germany from four bases to two. We envisage retaining Harrier and helicopter forces there. As Germany takes on the air-policing responsibility for its territory, we would envisage phasing out our air-defence contribution. We envisage maintaining six squadrons of Tornado aircraft in Germany and the United Kingdom with nuclear and conventional roles in Europe. The two variants of Tornado will provide the backbone of the future Royal Air Force. Aircraft not deployed in peacetime will be retained for use should we need to build back up our capability.

In view of Chancellor Kohl's request that troops of the three western powers should stay in Berlin as long as Soviet forces are in the present German Democratic Republic, we envisage continuing to contribute to an allied presence, including an RAF contingent, for this period in Berlin. We intend to retain an amphibious capability in the longer term, the role of which will include reinforcement of NATO's northern region. We shall also maintain an air contribution, to the defence of the northern region, but we are looking again at the future requirement for the United Kingdom mobile force.

Elsewhere in our maritime contribution, we need to take account of the decline in the size of the Soviet navy but also of its continuing modernisation, especially with new classes of submarine. We propose to maintain three carriers, update their Sea Harrier aircraft and, subject to satisfactory progress, proceed with the EH 101 helicopter programme. I envisage a future destroyer/frigate force of about 40 ships. The reduction would be achieved by paying off older, less capable ships. In addition to Trident, we envisage a future submarine force of about 16 boats of which three quarters would be nuclear powered. We see the Buccaneer force in the anti-ship role being replaced by dual-capable Tornados redeployed from Germany and re-equipped with Sea Eagle missiles. There would be a small reduction in Nimrod numbers.

A capability for other contingencies would be provided by establishing a strategic reserve division bringing
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together amphibious, parachute, airmobile and armoured formations with roles also in Europe or in national defence.

I have described how we now see the armed forces evolving in the period to 1995. These proposals are now for further study and consultation with NATO and or Brussels treaty partners. When we are able to take final decisions will depend on many factors, not least progress in the autumn on CFE talks, a successful outcome to the two-plus-four talks, a clear timetable for Soviet withdrawals from Europe, and the pace of discussions with our allies on the evolution of NATO strategy and operational concepts.

We shall want in particular fully to consult the German Government over changes in our deployments in Germany. We aim to move in an orderly and properly planned way to our new force structure, after the consultations that I have described and when the necessary conditions have been met. We shall at the same time conduct a detailed scrutiny of our equipment plans, including our research and development effort, to ensure that they would be in keeping with our changed requirements.

Work remains to be done on detailed force structures and on changes in the support area, where we will be looking for substantial savings, before we can clarify the implications for individual units. We envisage in broad terms by the mid-1990s a Regular Army of about 120,000, Royal Navy/Royal Marines of about 60,000 and a Royal Air Force of about 75,000. On that basis, the overall reduction in regular service manpower would be about 18 per cent. We expect our civilian numbers to be similarly reduced. The volunteer reserves will continue to play a key role, and we wish to consider the appropriate numbers for the future, having regard to our needs and realistic levels of recruitment and retention.

There will now be further work on the detailed implications of these broad proposals. Their costs will, of course, be within the expenditure plans published in the last public expenditure White Paper. Revised figures for defence expenditure will be announced as part of the Government's decisions on the total public expenditure programme in the Chancellor of the Exchequer's autumn statement. In respect of the current year, the House is aware that I am taking steps to constrain expenditure within the agreed provision. Announcements have been made on aircraft. Consistent with our longer-term plans, we shall be easing back on Army recruiting and retiring early several ships and submarines, and making some other short-term changes to the programme which will be announced shortly.

This country has owed a great debt to its armed services throughout its history. Their abilities and professionalism are not something that can be lightly discarded and then easily recalled when they may suddenly be needed. We have a duty to tell them what we believe the future is likely to hold for them at a time when the pace and scale of events in Europe offer real opportunities for change.

We believe that the new force structures that we envisage can give us strong and reliable defences, in changing circumstances, and at an affordable cost. Our proposals provide for us to continue to make a major contribution to the north Atlantic alliance as it adapts to the changes that its resolution and cohesion have done so much to make possible.

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It is a time of opportunity and hope for change, yet without putting at risk the safe protection of our country nor neglecting fair consideration of those whose task that is. Our aim is an orderly and planned transition to the new world now unfolding, and I commend it to the House.

The House welcomes the statement. For a while, it was uncertain whether we would have it before the House rose, and today was both the first and last possible time to have it. The statement is the first useful step in the consideration of our response to changing events. As the Secretary of State said, it dovetails with the report of the Select Committee on Defence. I am sure that the House will agree that many of the changes set out in the statement will come as a consequence of arms control and of Soviet withdrawals from Germany.

I realise that the statement was lengthy, and that many hon. Members wish to ask questions about it, but some points must be made. What significance does the withdrawal of two Army divisions have for equipment requirements, and in particular the orders for the replacement of the Challenger tanks? What implications will that have for the proposed multinational force? What discussions has the Secretary of State had with his NATO allies about what form this will take?

The Secretary of State said that the two variants of Tornado will provide the backbone of the RAF. Where does this leave the European fighter aircraft programme? How many of the proposed nuclear-capable aircraft will be in Germany? Have the German Government been consulted about this? My understanding is that there is widespread reluctance within Germany to accept this nuclear-equipped aircraft and nuclear weapons. What is the basis for this hosting programme?

I am sure that the Secretary of State is aware that the Select Committee on Defence has expressed considerable reservations about the tactical air-to-surface missile project. The House is entitled to know roughly what the costs of this programme will be and from where the weapons will be procured. Will they be American or Franco-British?

Will the Secretary of State confirm that this is the first occasion on which he has recognised that there are Soviet naval reductions? On a number of occasions we have had lectures about the Soviet naval procurement programme. In the light of these reductions, and in the light of the reduction in our Navy to about 40 frigates, will there be a replacement for the type 42? There will be all-party relief at his remarks about the EH 101 programme, about which there was great anxiety. His remarks will be taken as encouragement.

The significance of the announcements to service morale will not be lost on the House. In his statement, the Secretary of State suggests that there could be a reduction in recruitment, almost hinting at natural wastage as one of the solutions to the personnel problem. Will he confirm that natural wastage will not be the only method of securing reductions in troop numbers? Will he concede that it will be necessary to change the nature of service conditions and to attract to the services, for the new types of forces that he has recommended, a different breed of
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soldier who may well have to be paid more and who will certainly be looking for better conditions than those that have been suggested recently?

Will the Secretary of State confirm that the absence of any reference to an extended out-of-area role is in line with the views expressed in the Select Committee's report? Will he also confirm that we are seeing here an operation that will be working within the existing limits of British capabilities and that we will not have an enhanced out-of-area capability?

The Secretary of State's proposals will require much consideration within the House and outside. A number of people involved in the defence industries and the services have made a great contribution to the defence of Britain and they must be taken account of at this time.

Will the right hon. Gentleman make the financial implications of the changes known to the House as soon as possible and ensure that we have an early debate when the House returns after the recess or as soon as the autumn statement is available, so that we can discern the economic consequences of the cuts? They will mean little to the House without a price tag attached to them.

Will the Secretary of State arrange perhaps a two-day debate in Government time as soon as the House resumes so that we can examine properly the implications of his useful contribution to what we regard as a process which will be far longer and more extensive than he described today.

The House must respect the hon. Gentleman's courage. He rose to his feet with hon. Members behind him who are pledged, under a Labour party conference motion, to slash defence expenditure by as much as £9,000 million, and then made a moving speech on behalf of the workers in Leeds who hope to provide tanks, the workers of Westland who hope to provide helicopters and the workers in Edinburgh and Lancashire who hope to produce the EFA. We hope that it will be possible to proceed on all those projects, and I note his great concern for their future.

I am grateful to the hon. Gentleman for saying that this is a first useful step in putting forward proposals in response to the changing circumstances. I suspect that only the Conservative party will put forward concrete proposals on the matter. We shall look forward with great interest to a coherent response from the Opposition.

The hon. Gentleman referred to consultation in respect of the other proposals that I made. I sought to emphasise that I am putting forward a number of proposals on behalf of Her Majesty's Government in respect of our future defence structure which are precisely for consultation because we are determined to play our proper and full part in the NATO alliance.

The hon. Gentleman referred to TASM and the sub-strategic missiles with dual capable aircraft, but he will know that only this month the NATO summit here in London made the unanimous statement that there should be an appropriate mix of nuclear and conventional weapons based in Europe, and my announcement is absolutely consistent with that.

I am not hinting at natural wastage. I regard the opportunity to ensure that we make a proper, orderly and planned change as a virtue. We hope to achieve that in a way that takes proper account of the lifetime of service that many have given. We want to make changes to the
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new structure in an orderly and planned way. That is a duty that we have to those in the armed forces, and it is one that the Government are determined to discharge.

Order. This is a major statement, and the House will be aware that there is another statement to follow and then the Report stage—for which 45 groups of amendments have been tabled—and Third Reading of a Bill. I regret that I must impose some limit, and so will allow questions on this statement to continue until 5 o'clock. I ask for single questions, please.

I thank my right hon. Friend for his kind remarks about the Select Committee's report, which I hope is an analysis of the circumstances in which changes are taking place, and which I hope will be helpful to the House. I strongly recommend it as holiday reading.

I congratulate my right hon. Friend on the thoughtful way in which he has produced the proposals for change, which must now be debated extensively and discussed in detail. He rightly said that it is in the context of our NATO obligations that we will decide the final shape of our forces. How does he envisage NATO making its options for change known, and how does he envisage that developing as the collective response to the changed circumstances in western Europe?

Our allies have made certain statements. For example, Chancellor Kohl announced a figure of 370,000 for the Bundeswehr for a united Germany. Other NATO allies have also made proposals. It is now urgent that NATO gets together with the various elements and components to determine how that might develop.

I did not respond to the point raised by the hon. Member for Clackmannan (Mr. O'Neill) about the concept of multinationality. There is the possibility of a multinational corps in which we could make a significantcontribution. That is the way to go forward.

I am grateful for what my hon. Friend, who is Chairman of the Select Committee, had to say and for the encouragement expressed in the report for the view that it is necessary to tell as soon as possible all those who work in the armed forces about the likely shape for the future. That is the purpose of my statement. I shall honour my pledge of a genuine opportunity for consultation so that the charges can be orderly and sensible, with the maximum involvement of those concerned.

I welcome the broad thrust of the proposals as a first step for conventional forces. I support the right hon. Gentleman's proposal for a fleet of four Trident submarines. I hope that he will understand my disappointment that, as yet, no consideration has been given to the suggestion that the number of warheads to be deployed should be no greater than those presently deployed in the Polaris system.

The right hon. Gentleman should understand that there will be great disappointment about the suggestion that the United Kingdom might seek to deploy the tactical air-to-surface missile. There may be a NATO case for the deployment of that weapon, but thus far no compelling evidence has been produced to justify the United Kingdom embarking upon that course.

I am grateful for the hon. and learned Gentleman's general welcome, even though he let himself down a little at the end of his remarks. The biggest. waste of money conceivable would be to have a nuclear deterrent that was not credible and not effective. That is the base line. There is no point in having a deterrent if it is not likely to work and is not likely to provide the deterrent effect that we seek. The deterrent has proved to be the biggest life saver in the history of man, and we are determined to maintain that capability. That is my first point.

Secondly, our policy is absolutely clear in the sense that the background to my statement today is the success of the policy to which we have held over the years. Part of that is not to depend solely on a strategic nuclear deterrent but to have a sub-strategic nuclear deterrent. That of course has the unanimous agreement of NATO.

Does my right hon. Friend recognise that the caution with which he has made his statement today, both as to the size of the possible economies and the time scale within which they may be available, will be much welcomed on this side of the House? Will he continue to reaffirm that the reason why he is able to make his statement—cautiously optimistic as it is—is precisely because this Government supported the policies of the NATO alliance, which brought about the reassessment of Soviet foreign policy, against continual opposition from the Labour party at every stage? Will my right hon. Friend tell the House how he sees the ever-increasing costs of weapons procurement within a constrained defence budget being met unless we recognise the need for ever-wider international co-operation in weapons procurement?

I thank my right hon. Friend for his comments. The leadership of my right hon. Friend the Prime Minister, and of my right hon. Friend the Member for Henley (Mr. Heseltine) as one of my predecessors, in standing firm at a critical moment in our history, is now viewed by many as the turning point that opened up the possibility of the wonderful changes that we have seen. One might have hoped that some of those lessons would at last be appreciated by some Labour Members.

We now begin an intensive period of examination of force structures, equipment programmes and support arrangements. There is a tremendous amount of work to be done. My right hon. Friend the Member for Henley made the point that our allies face similar challenges. I spoke to our major allies this afternoon, and they are considering at this moment the difficult challenges that confront them. We shall wherever possible examine taking advantage of co-operation and cost sharing in programmes.

As far as I can see, the Secretary of State's statement makes no reference—any more than did his defence statement of a few weeks ago—to the nuclear non-proliferation treaty, even though it comes up for possible renewal or may end in a few months. The Government must surely have a policy on that issue. Do not the Government understand that, especially in the light of the most welcome ending of the cold war, far and away the worst danger of the world being blown to pieces is the proliferation of nuclear weapons in other countries? If Defence Ministers in other parts of the world listen to the Secretary of State, it might be a recipe
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for the multiplication of their weapons. Will the right hon. Gentleman say what steps the Government will take to make the nuclear non-proliferation treaty truly effective?

The House will certainly hand to the right hon. Gentleman any award for consistency of position, no matter how consistently wrong that position has been. Our position has always been abundantly clear. If the right hon. Gentleman cannot distinguish the benefits that have come from our possession of a deterrent and the sensible maintenance of it, there is little that 1 can add to the length of previous debates.

I congratulate my right hon. Friend on his measured and orderly response to the challenge of the momentous events in eastern Europe and the Soviet Union. He will recall the disastrous effects of some of the cuts of the past—from the mindless disarmament talks in the 1930s to the more recent cuts that affected the Army's regimental system in the 1960s and 1970s. To help Army morale, what reassurance can my right hon. Friend give that we will not repeat the mistakes of the 1960s and 1970s?

I hoped in my statement to give a broad outline of our proposals. There have been some very worrying rumours suggesting that the reductions in the Army would be much more substantial, and the figure of 80,000 was quoted, implying that one in two people in the Army would lose their jobs. I hope that I have been able to give some reassurance about the numbers and the time scale.

The defence staff and the chiefs of staff have worked quite excellently on what I have been able to say today. We now want to widen the circle so that the individual services can also address the particular problems that they have to address and we can therefore have a wider involvement of people. That is the best way to achieve a more sensible outcome.

I do not conceal from the House the fact that we will have to face some very difficult decisions and problems. However, throughout the armed forces and the Ministry of Defence there is a recognition that this is an opportunity for change. If it can be a movement towards a smaller and better defence structure for our country, it is to be welcomed.

Is not this statement a case of no serious change and no significant savings? Are not the Government guilty of extreme cowardice in failing to face up to the opportunities for disarmament and so transfer resources from war to peace? Will not the consequences be a slowdown in world disarmament and an increase in arms proliferation as other countries quote Britain's military posture as a reason for their actions?

I do not know whether the hon. Gentleman talks to the leader of his party about his policy. However, he may have noticed that my statement today, in certain important respects, follows on from the outcome of the NATO summit. He may not have noticed that, when the Leader of the Opposition was in Washington and talking about developments in Europe and the NATO summit agreement, the right hon. Gentleman said that it was good to be alive. I am not sure whether that spirit has quite spread to the hon. Gentleman.

I congratulate my right hon. Friend the Secretary of State for Defence on making it clear that the reductions that he envisages will depend not just on agreement over Soviet withdrawal and disarmament, but on the achievement of what is agreed. May I also congratulate him on making it clear that British forces will remain in Germany? The presence of British and French forces in Germany is fundamental under the Brussels treaty to the maintanance of the European Community. Does my right hon. Friend agree that developments in the Gulf over the past few days have made it clear that we may well have to share responsibility for out-of-area operations?

I am grateful to my right hon. Friend for his kind welcome for what I have said today. With regard to the continuing presence of British forces in Germany, it has always been made clear to me by the German Government and NATO that stationed forces—those of the United States, the British and our other allies—are an important element in the cohesion of the alliance.

With regard to my right hon. Friend's second point about developments elsewhere, whatever implications such developments may have for us, in many areas the world is not a very steady and safe place at the moment. It is very important for the basic needs of this country, with its responsibilities, alliances, interests and connections, that we maintain an adequate defence capability.

I welcome the undertaking to continue the commitment to Northern Ireland, but would it be possible to increase the number of specialist elements, including the supply of helicopters, which are urgently needed by the Regular Army, the Ulster Defence Regiment and the police, particularly in the light of yesterday's atrocity.

I am grateful to the right hon. Gentleman for noting that I confirmed our determination to maintain our contribution. We will certainly consider specialist aspects. There is always a steady stream of requests for one thing or another, as I know very well, wearing one hat or another. We will certainly seek to respond to those requests as effectively as we can.

May I commend my right hon. Friend on his timely statement and on appearing to get the balance about right in these crucial matters? I wish him well in carrying out the restructuring and making sure that we shift slowly towards a maritime strategy as opposed to a continental one. In that context, I note the considerable reduction in submarines.

I wish my right hon. Friend well in making sure that his future programme is led by strategic needs and not by the considerable pressures of the Treasury Bench.

My hon. Friend waited until my right hon. Friend the Chief Secretary to the Treasury had withdrawn before embarking on that brave sally. Certainly we have tried to strike a fair balance. I understand why my hon. Friend picked up my point about the change in submarine numbers from 27 to 16. The reduction appears bigger than the reality. The Soviet Union is reducing the number of submarines but introducing more capable, effective and modern submarines. That is exactly what we shall be doing.

Does the Secretary of State agree that the first challenge which faces him in his restructuring task is to preserve the high quality and motivation of British service men, who are so widely admired throughout the western alliance? His second challenge is to find the right strategic decision when no one can foresee the strategic shape of things to come. The right hon. Gentleman mentioned the lack of agreement on CFE and two-plus-four; he might have mentioned instability in the Soviet Union. Therefore, he is quite right to resist the temptation to cut the services ruthlessly and arbitrarily. If the House is entitled to look for a peace dividend, the services are entitled to look for a services dividend. Will the right hon. Gentleman say a word about the force structure that he envisages for the strategic reserve division?

The whole House knows the keen interest that the hon. Gentleman takes in these matters. I am extremely grateful for what he said. Now that our words go rather further afield, I know that his comments will be deeply appreciated by our armed forces who serve in many parts of the world. On a day when two of them have just been awarded the George medal, it is a reminder of the professionalism and courage that they bring to bear in quite unexpected circumstances and of the debt that we owe them.

The exact structure of the strategic reserve division will require further consideration. I have tried to set out the elements that will be within it, and that work will now be carried forward.

Does my right hon. Friend agree that his statement today illustrates the fact that a multi-balanced force reduction approach is more appropriate than a unilateralist approach? He would not have been able to make reductions without reductions on the other side of the iron curtain. Will he say a little more about the future of amphibious capability, as many of us take the view that the Royal Marines and the flexibility they provide are particularly appropriate to modern defence?

I am grateful to my hon. Friend. I made it clear that we intend to maintain an amphibious capability in the longer term. Obviously, that includes the capability of marine commandos to discharge their amphibious work. The House knows that we are considering the vessels that are required for that, but it is important that we maintain that capability which provides the flexibility and mobility that will become increasingly important if we have lower force structures and levels.

In adding my welcome to the broad objectives of the statement, may I put it to the Secretary of State that, in an uncertain world, it is prudent common sense for Britain to maintain an effective minimum nuclear deterrent for the foreseeable future? As the sub-strategic systems are just as important as the four-boat Trident force, when will the Secretary of State be able to announce a decision on the weapons system to be carried by the Tornado?

I am grateful to the hon. Gentleman, who takes a close and well-informed interest in these matters which qualifies him to contribute to defence debates in the House. On the latter point, as he knows, we are considering two alternatives—the American and the
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French options. I cannot give him a precise date, but by the end of the year we hope to have formed a view on that. I cannot say anything more precise than that.

Will my right hon. Friend accept that many thousands of people with the sort of experiences of my generation will regard this as a sensible package, above all because we retain the capability to meet unforeseen circumstances, albeit at a lower level? Will he ensure that the three services can, within the overall figures, make their proposals for reductions and give their ideas on the new form of services? Will he say how pleased many thousands of people will be that the Harrier and EH101 programmes are to proceed?

I am grateful to my hon. Friend, who has a distinguished record. Obviously, the House listens with great respect to his comments. He may be interested in the quotation that I found today, which says of the Korean war:
It was a contingency which took the British Government and its military Chiefs of Staff by surprise; the first of many in following years to make unexpected and irresistible claims on money and manpower.
We certainly hope that we shall not face anything like that again. My job is not to take risks but to ensure that, if what we do not want to happen occurs, we can defend ourselves. My hon. Friend knows the importance of that better than any. In answer to his two points, yes, I hope that that will be possible.

I welcome the Secretary of State's decision to make a statement before the recess, but may I press him for a debate when we return? Will he give the House the benefit of his thinking on the threat assessment, which led him to his conclusion to go ahead with the tactical air-to-surface missile? How many ships does he intend to decommission, given that we have about 40 frigates and destroyers? In view of the importance of the statement to the economy of the fourth poorest country in the world, will he reassure the House that today's announcement does not entail any change to his previous statement about the future of the Brigade of Gurkhas?

My right hon. Friend the Patronage Secretary has a good line to my right hon, and learned Friend the Leader of the House and he will have heard the hon. Gentleman's first comment. I would welcome the opportunity for a debate, the timing of which can be discussed.

The hon. Gentleman asked about the number of frigates. The current number is 48 and, as I said, it will decrease to about 40 through decommissioning or disposing of some older frigates. There will not be an equivalent reduction in capability. I am aware of the statement on the Gurkhas made by my predecessor in May last year.

Is my right hon. Friend aware that the most welcome part of his statement was the undertaking that the reductions are entirely dependent on successful CFE and two-plus-four talks, and the reduction of Soviet troops in eastern Europe? Can he assure us that he is aware that, at a time when he is reducing manpower in the services, it has never been more important to ensure that our troops are given
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the best possible equipment available in the world, whether tanks or whatever, regardless of where it is manufactured?

I again confirm that what I have said today is conditional on the developments going in the direction that we want them to go. We can change direction or arrest development and build back up if our hopes are dashed. The hon. Member for Sheffield, Attercliffe (Mr. Duffy) picked up the phrase "service dividend". I attach importance to that, as well as to any implication of savings called a peace dividend. In a service dividend I certainly include equipment which is reliable, which works and for which there are spares, so that we can ensure better equipped, even if smaller, armed forces.

Will the Secretary of State, in simple and straightforward terms, tell the House exactly how much money the Government envisage saving as a result of his statement? Will he confirm that there will be an early opportunity for debate, particularly as the announcement that four Trident submarines will be based on the Clyde will be met with bitter resentment in Scotland? Will there be an opportunity in the course of that debate to explore why the Opposition Front-Bench spokesman did not carry through the clear declaration from the Labour party conference in Scotland that it did not wish Trident submarines to be based on the Clyde?

On the first point, which I sought to cover in my statement, I cannot give an answer to the hon. Lady, for the obvious reason that I have set out our policy. We believe that this is the right approach to the defence strategy of our country. We must now examine the matter in detail and cost in detail the implications of it. I have talked about an 18 per cent. reduction in the level of our armed forces, equivalent reductions in civilian manpower, the need to examine the support area for equivalent savings, and the need to examine our procurement budget and weapons system as well. The outcome of that will produce significant savings during the later part of the year.

As I have told the House, as for this year, I am facing serious problems with transitional costs and inflation. I have already announced to the House certain savings that we must make. We shall obviously live within whatever cash base line we have for this year. That is the answer to the first point about money.

On the second point, I do not want to intrude on private grief between the hon. Lady and whichever is the nuclear wing of the Labour party.

Following my right hon. Friend's most constructive statement, will he give an assurance that the regimental system will be maintained and that the old regimental area and county names and Scottish regimental names will be retained? In view of the statement by the hon. Member for Moray (Mrs. Ewing), I assure my right hon. Friend that Scotland will play its full part in the defence of the United Kingdom with pleasure.

I am grateful to my hon. Friend, and I can give him that confirmation. Unlike the Opposition spokesman, we believe that the regimental system has real relevance and is a valuable part of our structure. I am amazed that the hon. Member for Clackmannan (Mr.
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O'Neill) should say that he no longer regards it as relevant. I have no doubt that he will live to regret his remark very much. Anybody who knows anything about the Army deeply believes in the importance of the regimental system.

When will the Government recognise that England is no longer an imperial power? Instead of continuing with the overseas commitments that the Secretary of State has announced today, in the present political and military climate, is it not about time that we withdrew completely from those commitments? Now that the Soviet Union has agreed to withdraw Soviet forces from eastern Europe within four years, why does not the Secretary of State announce that we shall withdraw British forces from the mainland of western Europe in the same time scale?

I am not pretending that we are an imperial power; I am making it clear that we are a loyal member of an alliance. I am interested to know whether it is the hon. Gentleman's party's policy to dishonour an alliance and to betray the allies with whom we have stood for 45 years. If that is his policy, perhaps the hon. Gentleman will tell us.

My right hon. Friend's statement will be welcomed for clarifying the future of the armed forces as well as the wider community. Will he give an assurance that the welcome plan to form the new division to bring together our various land and air capabilities will take full account of the present instabilities in the middle east, not only in the Persian gulf but in other parts of the middle east where there are considerable threats to security and the supply of oil to western Europe.

I am grateful to my hon. Friend. I commented earlier on instabilities in the world. Certainly we must recognise that the proliferation of weapons and the tensions combine in a worrying way at this time. We are certainly aware of that.

It may be possible in two years' time to cut even more substantially the present force levels. Most people would agree that, because there are so many uncertainties, prudence is necessary in the meantime. The cuts that have already been announced are substantial and will hurt deeply. If, as appears to be correct, the Soviet naval building programme continues and the Royal Navy is unable adequately to meet its existing commitments with about 50 frigates and destroyers, how can the Secretary of State believe that with about 40 frigates and destroyers there will be no loss of capability? I await anxiously his reply. I simply do not believe that it will be possible to cut to 40 without having to reduce capability. Is the Secretary of State considering reducing capability?

Our naval capability has to be matched to our assessment of the threat, as it has been in the past. As I have already made clear, the Soviet numbers are being reduced. However, as the hon. Gentleman knows, the enhanced capability and quality of the new submarines are high. Our changes are in much the same direction. We know the enhanced capability of our newer submarines. The reduction in submarine and frigate numbers relates to older boats. We shall seek to ensure that a balance is kept.

I ought to warn the hon. Gentleman—he may not be aware of this—that his hon. Friend the Member for Clackmannan (Mr. O'Neill), who is the shadow
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spokesman on defence, used the phrase, "This is something that we shall have to pay very close attention to," when referring to a new study, published today, that proposes that no more tanks, frigates or attack submarines should be bought. Apparently, the European fighter aircraft will be cancelled, but Trident will be kept. I do not know whether that is the new Labour party policy, but it shows how confused it is getting.

My right hon. Friend's statement will be admired well beyond the House. Within the NATO alliance, however, there are certain nations, and many more political parties, that wish more drastic cuts to be made in their national defence structures than that which my right hon. Friend suggests for the United Kingdom. Will he bear in mind the fact that the CFE negotiations in Vienna are not going as well as might have been expected? We hope that a treaty will be signed in December, but until it is signed, will my right hon. Friend make it absolutely clear in NATO that our defence structures must stay as strong as he has suggested and that we must not give way to demands for a peace dividend?

I am grateful to my hon. Friend. We are trying to get the balance right. There have been massive changes. Whatever happens in Vienna, it is difficult to believe that east Germany, Hungary and Czechoslovakia will shortly return as fully paid-up membes of the Warsaw pact, as they were, say, two years ago. The position in the Soviet Union is much more uncertain; there are enormous tensions there. That is why I believe that the balance that I have put before the House today is the right one to strike.

Before the right hon. Gentleman's statement, Britain was spending 40 per cent. more of its gross domestic product on defence than West Germany, although West Germany is closer to the Soviet Union than we are. However, his statement means that we shall be spending a greater proportion of our gross domestic product on defence than West Germany. How does he justify that?

I am grateful to the hon. Gentleman for joining in the debate. We know that he speaks for the majority of Labour party members. At the Labour party conference, the hon. Gentleman, the hon. Member for Lewisham, Deptford (Ms. Ruddock) and Bruce Kent carried their motion by a 2:1 majority against the Opposition Front Bench, so he is entitled to speak, and he speaks with authority. He wants a £9 billion cut in the defence budget, so it is either the end of the Royal Navy, or the end of the Royal Air Force, or both.

My announcement will lead to a reduction in our armed forces from 310,000 to some 255,000. In Moscow, Chancellor Kohl announced a figure of 370,000 for the Bundeswehr in Germany. That is for a country that does not carry responsibilities that some other countries have to bear. I am not sure whether behind his question lies the proposal that we should shift to conscription. Anybody who examines the financial costs knows that one of the reasons why German costs could be lowered is that Germany does not have a volunteer army: it has conscription.

I welcome the soundness of my right hon. Friend's statement, but will
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he confirm that the retention of trained personnel will be of even more importance in the future? Will he emphasise the role of the services in the peace dividend?

I am grateful to my hon. Friend. I hope that he understands that we shall approach that question positively. I am anxious that the consultation should be meaningful. I am grateful to have had the opportunity to set out the framework within which we shall work. We shall consider a number of suggestions, such as the one that my hon. Friend made.

What was meant in the statement by
a detailed scrutiny of research and development in keeping with changed requirements"?
I acknowledge that it is a complex subject, that there are many contracts with people and that there is a great deal of talent in the research industries and establishments of this country, so could they not be put to use by British industry? Why is it that our industrial costs are so much greater than those of the Germans and the Japanese in terms of research expertise? Could not an imaginative plan be devised before September or October to help not only the universities but institutions such as the natural history museum, which is important for its research into global warming? We have obligations to skilled people. Can we honour them?

I am sorry to disappoint the hon. Gentleman, but the sentence means exactly what it says. It may lead in part in the direction in which he looks. We must examine the scale of research and development in defence and decide how much we can afford and what research and development is justified. If that means that we can release resources, they may be able to go to some of the institutions to which he referred.

Does my right hon. Friend accept that both the Royal Marines and the Parachute Regiment will be delighted with the formation of the new division? I am sure that they will work in friendly rivalry within it.

In all that my right hon. Friend said there is the presumption that Germany will remain within the NATO alliance. However, he knows that there is a very outside chance that the socialists and the greens in Germany will win the election in December. Does he agree that, if that unfortunate circumstance were to come about, there might have to be yet another rethink?

I would have expected my hon. Friend's opening comments. I know of his great loyalty to and support for the Royal Marines and the Parachute Regiment. As for his question about Germany's membership of NATO, I have always believed that in the end the Soviet Union, whether reluctantly or otherwise, will be forced to accept the democratic decision of the people of East Germany and of a united Germany. It is important for the coherence of NATO that that remains the position.

The statement is a welcome start, but the Secretary of State cannot be accused of seizing opportunities or grasping nettles, let alone of beginning to convert the defence industries. The right hon. Gentleman referred to the Select Committee's report. May I therefore appeal to him to pay particular attention to the cautionary remarks of the Select
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Committee about the danger of nuclear escalation through the deployment of tactical air-to-surface missiles? Would it not be a vicious irony if a conventional peace dividend were to clear the decks for a nuclear war?

I am not sure how the hon. Gentleman ended, because I lost the thread in the middle. Although he may think that my statement was modest, I assure him that its implications will be profound for both those in the armed forces and those who work in support industries. He should reflect on the implications of that. There will also be implications on the procurement side for some of the defence industries. I dare say that even in his surgery he may find people who will not believe that my statement was modest.

Will my right hon. Friend confirm that recruiting will continue at a sufficient level to maintain an appropriate profile of age and experience in the armed forces and to ensure that the armed forces continue to provide a worthwhile and rewarding career? Does he share my surprise, indeed incredulity, that the Opposition spokesman should express anxiety about pay in the armed forces when his party held down pay as a matter of policy? As a result, our first act in government was to increase armed forces' pay by 32 per cent. to bring it back in line.

Whatever the Opposition Front-Bench spokesman may say, I shudder to think what the hon. Member for Brent, East (Mr. Livingstone) would propose for armed forces' pay in view of his proposals for defence as a whole.

My hon. Friend's first point was an important one. It will be a challenge for us to ensure that the changes are made in a way that maintains the structure of the armed forces and a sensible age profile. I am under no illusions that that will be a real challenge.

Without casting aspersions on the morals of the Secretary of State, may I say that he sounds like a religious prostitute who said, "Oh God, make me pure, but not yet." [Interruption.] The House should not get so excited; I have waited all this time. We are slower than any other major nation to realise precisely what has happened in the Soviet Union and eastern Europe. The Secretary of State and the Government act as if the Russians were about to attack next Thursday. In all conscience, why do the Government not realise that this is not only a militaristic matter? The poor, the sick and the old are waiting for the peace dividend, and it is time that we did something about the money. What does the Secretary of State intend to do, other than being so militaristic or conveying that impression? Do we always need an enemy? Will the enemy continue to be the Soviet Union, or could it be that we are getting weapons together like Gaddafi and others and that the Arabs are the real enemy?

I was in the House last week when the hon. Member for Wallsend (Mr. Garrett) had something to say as someone who had fought in the last world war. It was an attitude like that of the hon. Member for Sheffield, Hillsborough (Mr. Flannery) which made people believe that they could safely plan on the basis that there would not be a war for the next 10 years. It was the 10-year rule.
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That was carried through from a Cabinet to the defence chiefs in 1919 and it rolled forward to 1932. It resulted in soldiers having to exercise with football rattles instead of real ammunition and it left the country dangerously undefended. It is precisely that attitude—

In congratulating my right hon. Friend on his courageous statement, may I ask him to take special care with the 173,000 civilian employees of the Ministry of Defence? Will he bear in mind the fact that health, education and housing costs for soldiers are borne at present by the defence budget but in future will be borne by the civil budget? Will he take particular care to consult the local authorities and the providers of those services?

My hon. Friend's point is beginning to sink in with some Opposition Members. It is that some of the changes may have greater impact in some constituencies than certain Opposition Members appear to appreciate. I certainly take note of the proper concern of my hon. Friend about the position that may arise in his constituency. I understand why he is anxious about it.

Does the Secretary of State accept that his decision not to cancel Trident and thereby save billions of pounds is immoral and outrageous? What will he say to the 139 non-nuclear nations which renounced the possession and deployment of nuclear weapons at the review conference? What does he intend to say in his pompous and arrogant tones? Will he say that, as Secretary of State, he is prepared to be disloyal and to dishonour clause 6 of the United Nations nuclear non-proliferation treaty, which his Government support, which successive Governments have signed, which commits us to getting rid of nuclear weapons and which he is betraying?

Is it my right hon. Friend's intention to maintain or reduce the number
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of the Royal Marines, bearing in mind the excellence of that corps and its capacity to turn its hand to almost anything? May I point out to my right hon. Friend that the Government may be considering the amphibious capability but that they have been doing so for longer than I care to remember?

No. we are not considering it—we intend to maintain it. I make that absolutely clear. I ask my hon. Friend not to read anything specific into my statement. I made a broad statement of our approach. I have tried to give as much reassurance and clarification as possible.

Several hon. Members asked about the position and prospects of individual units. I do not anticipate any significant change in the position of the marine commandos. However, I want to have a genuine consultation exercise in which we can carry forward our approach and, under the broad structure that I have defined, consider what the future should be. I do not want to dictate it from the Dispatch Box. I want the people involved to take part in the process.

Thank you for calling me, Mr. Speaker. At least I have been able to produce my own peace dividend by betting that I would be the last to be called!

The Secretary of State's statement tells me two things. First, it is a defeat for the Minister of State for Defence Procurement. Secondly. the Secretary of State has missed a wonderful opportunity. The people of Britain expect a peace dividend. The opportunities were there for the Secretary of State to cut defence by as much as 50 per cent. to allow the real problems, not the problems from the Soviet Union, to be addressed, including the education crisis in our schools. homelessness and poverty. We are left, as before, with the best defended cardboard cities and dole queues in Europe. The right hon. Gentleman has missed a wonderful opportunity.

The hon. Gentleman's oratory sounds impressive, but why has he totally failed to persuade the leadership of his party of the arguments that he just advanced? He knows that that is not its policy. I have sought to put before the House a sensible response to the changes that have occurred. It will maintain the security of our country against the unexpected. A defence policy must provide that insurance. The hon. Gentleman was wrong on his second point, and completely wrong on the first.

The majority of the House will welcome the commitment to a four-boat Trident submarine fleet. That is good news, not only for those who believe in a credible nuclear deterrent but for my constituents, even if it is bad news for the Opposition and the Labour party in my area.

Will my right hon. Friend clarify one part of his statement? He said that he envisaged a 16-boat submarine fleet, three quarters of which will be nuclear-powered. Will he elaborate on the future shipbuilding programme and, in particular, say whether there is to be a follow-on to the Trafalgar class submarine, a nuclear-powered submarine, the seventh and last of which is currently being completed in Barrow?

For the reasons I gave in relation to the Marines, I hope that my hon. Friend will forgive me if I do not talk in detail about the programmes. We are looking at them now. As my hon. Friend rightly said, we are committed to a four-boat Trident programme and we are looking at the future programme. We see a continuing need for nuclear submarines and to maintain a modern nuclear capability. I would rather not go any further today than my statement.

I read those reports, too, as did the chiefs of staff. If I failed to make it clear earlier, I reaffirm my deep appreciation of the work of the Chief of the Defence Staff, Marshal of the Royal Air Force Sir David Craig, and the chiefs of staff of the individual services. There is a new structure in the Ministry of Defence under the Chief of the Defence Staff which has been responsible for the work I have been able to announce today. Signals have gone out to all the individual services today, and I am pleased to see the positive approach that has been taken. I have referred to the concept of smaller and better. Throughout the services, I think that it is genuinely felt that this is an opportunity to reshape the services on a basis that can provide benefits, albeit on lower force numbers, for the services. I have been encouraged by the positive and helpful way in which the Chief of the Defence Staff and the chiefs of the individual services have responded to the challenge.

With the reduction in the surface fleet, can my right hon. Friend give as much reassurance as possible to me and the people of Portsmouth about the future of the naval base there. the fleet maintenance repair organisation and other supporting roles within the naval base?

I am afraid that I have to give my hon. Friend the same reply as I gave to my hon. Friend the Member for Plymouth, Drake (Dame J. Fookes). There are some detailed issues that now have to be examined against the broad structure I have described. I do not want to go into that today. They are matters of concern to my hon. Friend, with his close interest in issues affecting his constituency, and we shall try to reach conclusions on them as early as possible.

Will the Secretary of State accept that his substantial statement today, much of which will have been welcomed by many in the House, will be largely meaningless if price tags are not quickly applied? We urge the Secretary of State to make available all the financial information as early as possible, so that the best and widest possible debate can take place.